Credit Union Delinquency Drops 8 Basis Points At Midyear

Asset quality is stronger than one year ago as 2018 shapes up to be the best year for delinquency since the Great Recession.

Total delinquency at credit unions was lower at midyear 2018 than it was one year ago. Based on early performance data derived from 5300 filings, Callahan & Associates predicts total delinquency dropped 8 basis points to 0.67% as of June 30, 2018.

Although that is 1 basis point higher than the first quarter, delinquency rates this year continue to be the lowest since the Great Recession. In fact, the second quarter rate of 0.67% is a full 1.1 percentage point lower than the high recorded at year-end 2009.

The net charge-off rate increased 2 basis points year-over-year to 0.59%. Charge-offs for credit cards was up 32 basis points annually to 2.87%. This is the fourth consecutive year that charge-offs for credit cards has increased, and this quarter’s rate is the highest since year-end 2011. Historically, higher charge-offs in credit cards has led to higher charge-offs in consumer loans compared to mortgages. This quarter is no exception.


Total delinquency was up 1 basis point over first quarter; however, delinquency for the year is still the lowest in the post-recession era.

Delinquency for credit cards also was up at midyear. The only loan product to record such an increase, credit card delinquency was up 7 basis points to 1.15%. Credit card delinquency has been on the rise for the past four years, but the speed appears to be slowing. Credit card delinquency increased 7 basis points year-over-year compared to 15 basis points from second quarter 2016 to second quarter 2017.

At 2.87%, net charge-offs for credit cards was the highest it’s been since year-end 2011.

In addition to credit cards, auto loans are the other major component of consumer lending. Credit unions reported a drop in delinquency of 4 basis points, to 0.55%, in auto loans. Delinquency for new and used auto loans both dropped 2 basis points to 0.36% and 5 basis points to 0.67%, respectively. New auto loans had the lowest delinquency of any credit union loan product.

Like delinquency, charge-offs for auto loans were also down. Charge-offs were down 1 basis point to 0.44% for new auto loans and down 5 basis points to 0.75% for used auto loans.

New auto loans had the lowest delinquency of any product, 0.35%, in the second quarter of 2018.

First mortgage delinquency continued its post-recession decline. Since 2011, first mortgage delinquency has dropped 1.7 percentage points to 0.52% as of June 30, 2018. Real estate lending comprised the majority of the loan portfolio with first mortgages accounting for 41.0% of the industry’s loan portfolio as of June 30. At 0.48%, other real estate delinquency improved 7 basis points since second quarter 2017.

First mortgage delinquency has dropped 1.7 percentage points since second quarter 2011.


August 27, 2018

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